State Agencies Release 2016 Economic Forecasts

On December 21st, the Colorado Legislative Council (CLC) and the Governor’s Office of State Planning and Budgeting (OSPB) released their quarterly 2016 economic forecast . ( and The two reports provide slightly different estimates for 2015 and forecasts for 2016, both of which are supported by rational explanations. A comparison of the 2015 estimates for key indicators follows.

2015 Estimates

At the national level, the major difference is that OSPB expects U.S. unemployment to be slightly higher.

At the state level there are several items to make note of:
• Both organizations have indicated stronger than anticipated population growth.
• CLC projected employment to be near the current levels published by the Bureau of Labor Statistics. OSPB projected employment to be near the estimated benchmark revisions that will be made in March.
• Inflations in Colorado is much higher than the U.S. OSPB’s projection for employment is slightly higher than the CLC projection.
• OSPB is more optimistic than CLC about the number of construction permits issued in 2015.

U.S. Economy December 2015 Estimate for 2015
Category CLC OSPB
Real GDP % Change 2.5% 2.4%
Employment   Change % 2.9 million


2.8 million


Unemployment Rate 5.0% 5.3%
Inflation (CPI) 0.1% 0.1%
Colorado Economy December 2015 Estimate for 2015
Category CLC OSPB
Population Change /% +101,200




Employment Change/% +57,600




Unemployment Rate 4.0% 4.1%
Retail Trade Sales (Millions)/% $93,191




Home Permits (000s) 28.6 31.0
Denver-Boulder Inflation Rate 1.1% 1.5%

2016 Forecasts

At the national level, the two groups have similar forecasts. OSPB forecasted slightly higher U.S. inflation than CLC.

At the state level there are several items to make note of:
• Both groups are projecting population growth similar to 2015.
• Both groups are forecasting continued job growth; however, it will be at a slower level. There are drastic differences in the projected employment levels.
• OSPB is much more optimistic that CLC about construction growth.
• Inflation will be about one percentage point greater than the U.S. level.

December 2015 U.S. – 2016 Economic Forecast 
Category CLC OSPB
Real GDP % Change 2.3% 2.3%
Employment Change/% 2.6 million


2.4 million


Unemployment Rate 4.8% 4.8%
Inflation (CPI) 1.6% 1.8%
December 2015 Colorado – 2016 Economic Forecast
Category CLC OSPB
Population Change /% +95,200




Employment Change/% +47,300




Unemployment Rate 3.8% 3.8%
Retail Trade Sales (Millions)/% $98,037




Home Permits (000s) 32.0 37.9
Denver-Boulder Inflation Rate 2.4% 2.5%

The bottom line is that the state is expected to show continued job growth. The question is whether or not it will be at a level that is weak to average or will be average to modest growth.

Colorado has Diverse Cost of Living

How does the cost of living in your area compare to Broomfield County or Yuma County? The Colorado Legislative Council collects Cost of Living data for Colorado’s 64 counties and has done so every two years since 1993 for the Public School Finance Act of 1994 for the School District Funding Formula.

The current data is from 2013. It assumes a three person household, 1,500 square foot home, with household income of $49,100.Annual expenditures are broken down as follows:
• Housing 33.8%
• Transportation 19.3%
• Food 13.6%
• Health Care 7.3%
• Entertainment 4.5%
• Apparel 3.3%
• Other Categories 18.2%

The counties are indexed off the state HHI, $49,100. Twenty-one counties are above the state value and 43 are below it.

As expected the counties in the state’s “Very High” category are the ones where the state’s prime ski areas are located.

Rank County HHI Index Index Category
1 Pitkin $84,810 172.7 Very High
2 Summit $59,836 121.9 Very High
3 San Miguel $54,717 111.4 Very High
4 Routt $54,311 110.6 Very High

Four counties are in the “High” category. Boulder County is in the “High” category. It is the Boulder MSA

Rank County HHI Index Index Category
5 Eagle $53,931 109.8 High
6 Denver $53,796 109.6 High
7 Grand $52,067 106.0 High
8 Boulder $52,041 106.0 High

Twenty-two counties are in the “Mid-Range” category. Larimer County is in the “Mid-Range” category. It is the Fort Collins MSA. Note that Park County, #21, is only a few dollars above the state average.

Rank County HHI Index Index Category
9 Hinsdale $50,800 103.5 Mid-Range
10 Gilpin $50,677 103.2 Mid-Range
11 La Plata $50,670 103.2 Mid-Range
12 Broomfield $50,651 103.2 Mid-Range
13 Gunnison $50,298 102.4 Mid-Range
14 Jefferson $50,108 102.1 Mid-Range
15 Clear Creek $49,949 101.7 Mid-Range
16 Garfield $49,777 101.4 Mid-Range
17 Lake $49,745 101.3 Mid-Range
18 Douglas $49,722 101.3 Mid-Range
19 Ouray $49,502 100.8 Mid-Range
20 San Juan $49,197 100.2 Mid-Range
21 Park $49,115 100.0 Mid-Range
22 Arapahoe $48,570 98.9 Mid-Range
23 El Paso $48,427 98.6 Mid-Range
24 Larimer $48,319 98.4 Mid-Range
25 Mineral $48,222 98.2 Mid-Range
26 Moffat $47,874 97.5 Mid-Range
27 Elbert $47,706 97.2 Mid-Range
28 Teller $47,489 96.7 Mid-Range
29 Adams $47,477 96.7 Mid-Range
30 Chaffee $47,320 96.4 Mid-Range

Sixteen counties are in the “Low” category. Weld, Mesa, and Pueblo Counties represent three of the states MSAs.

Rank County HHI Index Index Category
31 Morgan $46,604 94.9 Low
32 Delta $46,514 94.7 Low
33 Weld $46,419 94.5 Low
34 Custer $46,234 94.2 Low
35 Mesa $45,986 93.7 Low
36 Rio Blanco $45,932 93.5 Low
37 Pueblo $45,707 93.1 Low
38 Montrose $45,605 92.9 Low
39 Logan $45,519 92.7 Low
40 Rio Grande $45,301 92.3 Low
41 Alamosa $45,295 92.3 Low
42 Fremont $45,274 92.2 Low
43 Montezuma $45,206 92.1 Low
44 Jackson $44,834 91.3 Low
45 Archuleta $44,665 91.0 Low
46 Kit Carson $44,563 90.8 Low

Eighteen counties are in the “Very Low” category. These are all rural counties.

Rank County HHI Index Index Category
47 Dolores $43,943 89.5 Very Low
48 Phillips $43,713 89.0 Very Low
49 Costilla $43,537 88.7 Very Low
50 Saguache $43,331 88.3 Very Low
51 Las Animas $43,233 88.1 Very Low
52 Lincoln $43,044 87.7 Very Low
53 Huerfano $42,970 87.5 Very Low
54 Washington $42,947 87.5 Very Low
55 Yuma $42,786 87.1 Very Low
56 Sedgwick $42,781 87.1 Very Low
57 Otero $42,013 85.6 Very Low
58 Cheyenne $41,956 85.4 Very Low
59 Conejos $41,889 85.3 Very Low
60 Bent $41,477 84.5 Very Low
61 Crowley $41,440 84.4 Very Low
62 Prowers $41,197 83.9 Very Low
63 Baca $40,779 83.1 Very Low
64 Kiowa $40,438 82.4 Very Low

The Colorado Springs MSA includes El Paso and Teller Counties. They are both in the Mid-Range category, slightly below the state level of 100.

The Denver MSA has ten counties. Denver is in the “High” category and the following counties are in the “Mid-Range” category: Gilpin, Broomfield, Jefferson, Clear Creek, Douglas, Park, Arapahoe, Elbert, and Adams counties.

As can be seen, Colorado is a diverse state from many perspectives: geographically, ethnically, and from an industry mix. It is also a diverse state in terms of the cost of living. In simplistic terms, the cost of living is higher in the metro areas and the mountain resort communities and lower in the rural communities.

Colorado Economic Forecasts Point to Growth in 2015

It is the forecast season and three Colorado economic forecasts are on the streets.

First, the Governor’s Office of State Budgeting and Planning and the Colorado Legislative Council released their2015 Colorado economic forecasts.

Their forecasts are used for policy and budgetary purposes and at times tend to err on the conservative side. (That comment is intended to serve as a reference point, and is not meant as a criticism). The March forecast is often a more accurate reflection of what will happen during the year.

The good news is that both groups are realistically optimistic about the state’s outlook.

OSPB projects U.S. Real GDP growth of 2.7% with state job growth of 68,300. CLC is slightly more optimistic. They project U.S. Real GDP growth of 3.1% and state job growth of 73,600.

The quarterly reports produced by OSPB and CLC are recommended reading for anyone interested in the state economy. They discuss the economy for all regions of the state, key industries, and factors that impact the budget for the state government.

Finally, Richard Wobbekind recently unveiled the CU Leeds School Colorado economic forecast earlier in the month.  As usual it was a rewrite of the past four years. He expects the U.S. to see significantly stronger U.S. output growth. At the same time he focuses on Colorado being one of the leading states for job growth, yet he states that Colorado will add jobs at a decreasing rate in 2015 after modest growth in 2014. CU is projecting Real GDP growth of 3.1% and state job growth of 61,300 in 2015. Those numbers just don’t make sense.

Between now and next year, Wobbekind and the CU gang should read the paper “Macroeconomic forecasts and microeconomic forecasters”. Author Owen Lamont raises the question, “Does an experienced research team, with a wealth of knowledge, produce a more accurate forecast or does the added knowledge result in an “arrogance” which may reduce the accuracy of the forecast? The state would benefit from CU producing a Colorado economic forecast based on academic rigor rather than self-promotion.

The good news is that this part of the forecast season has passed and all projections point to continued modest growth in 2015. Bring on the new year!


Colorado Legislative Council and OSPB Optimistic About 2014

On September 20th, both the Colorado Legislative Council (CLC) and the Governor’s Office of State Planning and Budgeting (OSPB) released their quarterly economic updates. Their preliminary look at 2014 is positive.

Highlights from the CLC outlook for 2014 are:
• The unemployment rate will drop to 6.9%.
• 55,400 wage and salary jobs will be added.
• Retail trade sales will increase by 5.4%.
• 35,400 home building permits will be issued.
• Inflation will increase by 3.2%.
In summary, CLC feels the state will continue to add jobs at a similar rate to 2013, but unemployment will not decline substantially. Retail trade sales will show strong growth and there will be a modest increase in home building permits. Inflation may become an issue.

Highlights from the OSPB outlook for 2014 are:
• The unemployment rate will decline to 6.5%.
• 57,500 wage and salary jobs will be added.
• Retail trade sales will increase by 5.4%.
• 37,300 home building permits will be issued.
• Inflation will increase by 2.4%.
Job growth will be similar to 2013, which will lead to a slight decline in unemployment. Retail trade sales will show strong growth and the housing market will post modest gains. Inflation will remain in check.

For more details, check out the CLC quarterly report  and the OSPB report by clicking here. Both groups produce comprehensive economic updates on a quarterly basis. They are “must read” material for anyone interested in the state economy. The reports are released around the 20th of the month in March, June, September, and December.

©Copyright 2011 by CBER.

Colorado’s General Fund Making a Recovery

The Great Recession played havoc with the budgets of state governments. Colorado was no exception. In late December, the Colorado Legislative Council released its quarterly economic update that shows the impact the Great Recession has had on the revenue streams for the state government.

Sales Tax Revenue accounts for about one-fourth of the Gross General Fund. Sales Tax Revenue for the Fiscal Year (FY) 2013 is projected to exceed revenue for FY 2008 (not adjusted for inflation). [Note: The State Fiscal Year is July 1st through June 30th.]

It is projected that Net Individual Income Tax for the FY 2012 will exceed FY 2008 (not adjusted for inflation). This tax accounts for about two-thirds of Gross General Fund Revenue.

It is projected that General Fund Revenue for FY 2012 will be similar to FY 2008 (not adjusted for inflation). Total revenue was $7.743 billion in 2008. In 2012 it was 7.737 billion. In 2013 it is currently projected to be $8.026 billion. On an inflation adjusted basis, 2013 remains well below the 2008 total.

The Colorado State budget is much like the pocketbook of many Colorado residents. Over the past five years they have had to deal with wages that either declined or remained flat while experiencing expenses that escalated every year.

©Copyright 2011 by CBER.

Colorado State Government Employment Bucks National Trend

Across the country, state governments are slashing budgets and cutting the size of their state workforce. That is not the case in Colorado.

State employment has two components: Higher Education and State Government. Over the past two years, has reported how the Higher Education workforce has grown for the past decade.

As can be seen in the chart below, Colorado State Government employment (excluding higher education) has reported steady growth since 2004. This is contrary to the trend for the aggregate total of all states.

What lies ahead for state workers? Are these increases justified? Will the Governor continue to add workers to his team over the next year as revenues increase? What makes Colorado different from other states? Will state jobs reliant on federal funding be trimmed as adjustments are made to the federal budget? If the state population increases by 80,000 to 100,000 people every year, won’t it be necessary to add state workers to provide essential services for them? Will the state experience a post recession drop off in workers, as was the case in 2002-2004? How will the elections impact the future of the size of Colorado’s government?

Two sources are recommended for tracking the fortunes of the Colorado State Government: the Governor’s Office of State Planning and Budgeting and the Colorado Legislative Council provide quarterly updates of the state economy and finances.

To learn more about the challenges facing government leaders across the country, read The Report of the State Budget Crisis Task Force. The report focuses on six states but illustrates problems that exist in Colorado.

For additional information on the Colorado go to

©Copyright 2011 by CBER.

Great Recession Continues to Play Havoc with State Finances

The Great Recession has taken its toll on state and local governments. Three years after the end of the Great Recession state and local governments continue to face significant fiscal challenges. In mid-July The State Budget Crisis Task Force released a report headed up by Richard Ravitch and Paul Volcker that examined the challenges to financial stability for California, Illinois, New Jersey, New York, Texas, and Virginia. Just over 36% of the country’s population lives in these six states.

There are a number of variables (policies, economic structure, demographics, etc.) that differentiate the states; however, the report identified six fiscal threats common to each:
• Medicaid spending growth is reducing funds for other needs.
• Federal deficit reduction will result in lower funds for state coffers.
• Underfunded retirement accounts are a risk for future budgets
• Eroding tax bases and volatile tax revenues jeopardize state finances.
• Local government fiscal challenges may impact state budgets.
• State budget laws and practices hinder fiscal stability.

To show the seriousness of the problem the report evaluated changes in tax revenues generated from the peak-to-trough, the trough to 2011, and peak-to-2011. The changes in percentages are adjusted for inflation; however, they are not adjusted for policy changes. In some cases policy changes have been made that have or will positively impact revenues.

The change from peak-to-trough follows:
• U.S.  -12.0%
• California -14.9%
• Illinois  -18.7%
• New Jersey -17.2%
• New York    -4.3%
• Texas  -15.4%
• Virginia -15.9%

The change for the recovery, or trough-to-2011, follows:
• U.S.  +  5.7%
• California +11.9%
• Illinois  +12.9%
• New Jersey +  2.7%
• New York +  4.3%
• Texas  +  7.4%
• Virginia +  3.9%

The change from peak- to-2011, follows:
• U.S.  –  7.0%
• California –  4.8%
• Illinois  –  8.2%
• New Jersey -15.0%
• New York –  0.2%
• Texas  –  9.2%
• Virginia -12.6%

Colorado was not included in the report; however, the challenges faced by the state are similar. Data from the Colorado Legislative Council’s quarterly reports (June) show the following levels in the state’s gross general fund, expressed in billions:
• FY ending June 2008  $7.7
• FY ending June 2009 $6.7
• FY ending June 2010 $6.5
• FY ending June 2011 $7.1
• FY ending June 2012 $7.6
• FY ending June 2013 $7.8
• FY ending June 2014 $8.2

The Colorado data is not inflation adjusted. On an inflation-adjusted basis the level of the state General Fund will not return to the FY 2008 level until FY 2013 or 2014. The Colorado State Demography Office projects that the state population will increase from 4.9 to 5.4 million people for that period. In other words the state will add half a million people and have the same level of funding as five or six years ago.

It is truly a challenging time to be working in the public sector.

Links to the State Budget Crisis site and the Colorado Legislative Council site are:



©Copyright 2011 by CBER.

Colorado Legislative Council – Momentum Building

In late June the Colorado Legislative Council (CLC) released its quarterly update of the state economy Focus Colorado: Economic and Revenue Forecast. The report included mixed economic news – most of it good.

Nationally, there was reduced optimism compared to the CLC March forecast, with output growth revised downward from 3.2% to 2.6%. The Conference Board and Kiplinger have recorded downgrades of similar magnitude for real GDP. Other revisions include stronger employment growth and improved wage and salary projections.

The analysis of General Fund Appropriation budgets for FY 2010-11, FY 2011-12, and FY 2012-13 illustrates the fiscal challenges facing the state legislature. While funds from various sources are projected to increase, general fund appropriations will remain in the range of $7.2 to $7.3 billion for each of these periods.

On a positive note, CLC has upgraded its 2011 employment outlook from 0.7% to 1.1% or 24,400 jobs. They expect just under 40,000 jobs to be added in 2012. The forecast also points to slightly improved retail trade sales, income growth, and construction activity. On the down side slightly higher inflation is on tap.

The risks to continued growth remain significant. Consumer confidence remains low, constrained by concerns about debt, inflation, monetary policy, and weakness in the housing and construction markets. Despite these concerns, it is generally believed that these are factors that will prevent the economy from growing at a faster rate in the near term. Finally the chances of a recession are thought to be slim, less than 1-in-5.

At last, the majority of indicators are pointing to gradual improvement for the remainder of the year and solid job growth in 2012.


©Copyright 2011 by CBER.

Colorado Legislative Council – Outlook for the State Improving

The Colorado Legislative Council (CLC) recently released its quarterly update of the state economy Focus Colorado: Economic and Revenue Forecast. The report was released in mid-March, at a time when it appears that Q1 2011 employment will be approximately 15,000 jobs higher than Q1 2010. It is great to hear that net employment is again trending upward; however, state employment remains below the peak 2001.

Increased employment is good news for the state coffers!

The Q4 2010 forecast pointed to a budget shortfall of $1,015 million. Because Colorado is required to have a balanced budget, it became necessary to significantly reduce spending for K-12 education and other programs.

Over the past year, there has been an increase in consumption and private sector employment that now appears to be sustainable, hence justification for adjusting the revenue forecast  upward. Projections for FY 2010-11 were raised by $116 million, while revenues for the subsequent two years were upped by $99 million and $105 million respectively.

The combination of budget cuts and revenue increases point to a much lower projected shortfall, $450 million, for FY-2011-12. This is good news, but…

Nationally, CLC is calling for real GDP growth of 3.2%, similar to Q4 2010. After three years of net job losses, employment will increase by 0.4% to about 130.3 million jobs. Unfortunately, average annual unemployment for the year will be 8.7%.

At the state level, CLC projects population growth of 1.6% or about 78,000 people. This reflects a reduction in net in-migration to less than 40,000.

Wage and salary employment will post gains of 0.7%, or about 16,000 workers. While this growth is encouraging, it is not enough to significantly lower the rate of unemployment. Unemployment of 8.8% will be slightly higher than the national rate.

Retail sales are projected to record gains of 4.2%; however, inflation (2.3%), will account for more than half of that gain. Retailers will remain challenged to maintain profitability. Finally, single family building permits will be 15,300, slightly higher than in 2010.

The risks to continued growth remain significant. Consumer confidence is fragile and talk about a double-dip has resurfaced. Constraints facing Colorado include a painfully slow housing recovery, rising food and energy prices, and continued concerns about the banking system.

While the picture painted by CLC is certainly not a bright one, it is clearly much more encouraging.

©Copyright 2011 by CBER.

The Colorado Budget Challenge 2011 – Where to Cut?

For the next two months Colorado legislators will be dealing with the two-edged sword known as the balanced budget amendment.

During lean fiscal times, the amendment forces state senators and representatives to make difficult choices in this zero sum game. They have been faced with similar challenges since 2001 as growth in General Funds Revenue has not kept pace with increased demand for services.

For example, if you were a legislator, which of the following would you eliminate or reduce funding for?
• Social Service – Would you reduce or eliminate funding for single moms and lower income individuals to help them defer transportation costs so they can travel to work?
• Economic Development – Would you reduce or eliminate an incentive program that would retain or bring jobs to Colorado, foster growth in state output, and generate revenue for government entities?
• Health Care – Would you cut back or eliminate funding for a health-care program that would reduce services to elderly? The reduction in state funding would also decrease federal funding by a similar amount.  It is a tough time to be a state legislator.

On a positive note, the balanced-budget amendment means that Colorado is not having to borrow money from the Federal government to continue basic operations.

The table below, highlights the source and magnitude of the challenges facing the state government as it is forced to deal with increased demand and reduced revenue. The table compares key data sets for 2001 and 2009. Highlights of the table are:
• The Colorado population increased by about 700,000 people.
• K-12 enrollment is up 76,000 students.
• Despite tuition increases, enrollment at the state’s colleges and universities has grown by more than 21,000 students.
• The prison population is up by about 6,000 inmates.
• The number of Medicaid recipients almost doubled, up 226,000.
• Employment levels were very volatile. The 2009 average was only slightly higher than the 2001 average.
• General fund revenues remained virtually flat (not inflation adjusted).
• Growth of general funds will be constrained by the severity of the Great Recession.

Clearly, the state does not have a stable fiscal model for being competitive in the global economy. The rough ride will continue well into the future.

©Copyright 2011 by CBER.